Do ANCs deserve their special contracting status?

For many people, the government’s set-aside program for Alaska Native Corporations is a blemish on the federal acquisition system. Even people who otherwise support the idea of setting aside contracts for economically disadvantaged groups take a dim view of the program, which allows agencies to award contracts of any size to ANC firms without competition.

Ever since the death of its champion, Alaska Sen. Ted Stevens, opponents have called for the program to end. Here is an overview of the arguments for and against keeping it.

The case for the ANC program:

* It's a time-saver. Agencies can award sole-source contracts of any size to ANCs at any time. Therefore, the ANC program lets contracting officers move quickly when they’re pressured for time or caught in emergency situations, such as preparing for a hurricane.

The contracting officer doesn’t have to spend time justifying a sole-source award when using an ANC, said Larry Allen, president of Allen Federal Business Partners.

Officials also save time by avoiding the bid protests that are always a risk during full-and-open competitions.

* It stimulates the economy. The program benefits Alaska natives in economically depressed areas in the state and other parts of the country.

A 2009 survey of 11 ANCs by the Native American Contractors Association (NACA) showed that the companies provided more than $530 million in various types of benefits to more than 67,000 shareholders from 2000 to 2008. More than $341 million of that money was in cash dividends.

Alaska natives are given the opportunity to go to college, for instance, with their shares in the ANCs, said Jennine Elias, director of external affairs at NACA.

The program also provides funding for housing and government services, such as law enforcement.

* It's a promise-keeper. ANCs were created to settle land claims with Alaska natives and foster economic development, and the companies have been allowed to participate in the government's 8(a) minority-owned small-business program since 1986. Therefore, the ANC program fulfills a promise to the native community, Elias said.

The case against the ANC program:

* It short-circuits the procurement process. Although sole-source provisions can help in emergencies, the process can tempt an official to award a contract when it would be better to hold a competition for the work, Allen said.

There's no doubt that contracting officers are overworked, and the ANC program can help ease their workload. But, he cautioned, “a program with good intentions can get out of control."

* It undermines efforts to level the playing field. There was a big push for parity in government several years ago. Companies in Historically Underutilized Business Zones used to have first crack at set-aside contracts, but Congress put all small businesses on an equal footing last year.

“The theme is parity among other guys,” said Rob Burton, former deputy administrator at the Office of Federal Procurement Policy and now a partner at Venable law firm. But because ANCs don't have to follow the same rules as other small businesses, they have “an incredible deal."

Other small-business owners and Federal Computer Week readers have voiced their frustrations.

“The ANC advantage is unfair to real 8(a) companies and should be disbanded,” commented one reader from Virginia.

* Its benefits to the native community are questionable. The benefits ANC shareholders receive have come under scrutiny over the years. Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee's Contracting Oversight Subcommittee, has found some problems with the program.

In 2009, her subcommittee’s analysis revealed that only about $615 a year in money, scholarships and other benefits go to each member of the Alaska native community. The report also says the ANCs employ a relatively small percentage of shareholders and often send work to outside subcontractors. McCaskill has proposed changes to match other small-business rules.

However, Elias said ANCs are already required to report on what they’re doing in their community in the interests of transparency.

And Allen said it's a good program that would benefit from oversight by every agency, not just the Small Business Administration.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Mon, Nov 21, 2011

How about this, go to pogo.com and tell me after you read this that ANC's are the problem in government contracting. we are talking about 1% of sole source dollars spent by this country. take a look at the top 100 and the cases of fraud, bribery etc.. and what they paid in fines.

Fri, Nov 11, 2011
J Bridges; President SES
Omaha, NE

There should be a Federal Investigation into the abuses from the ANC program - there are Billions $$$$ going back SOMEWHERE with no accountability; its the BIGGEST SCAM is Govt procurement!!!
The SCAM should be immediately replaced with SDVOSB (which now has a very credible certification process); there's no one that can explain why the SDVOSB program cannot get off the ground???

Thu, Nov 10, 2011
Nando Martinez
Washington, DC

Veteran owned small business should be given the super 8(a) status without the SBA red tape and allowed to get sole source contracts from any fed agency. Currently Veteran owned small business can only get sole source contracts from the VA. Why is an Indian owned company or tribe more inportant than our veteran owned small businesses? It's time that this country start treating our veterans better....Nando NandoGroup.com

Thu, Nov 10, 2011
MD

I CANNOT believe you even TRY to make a case for ANCs. Time to GO.

Thu, Nov 10, 2011
Frank Matt
Tucson, AZ

Do ANCs deserve their special contracting status, NO! The ANC program is broken and has been for a long time and needs major reform and oversight NOW! How many more reports and criminal indictments does the government need in order to take action!

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